It is understandable that consumers often have difficulty telling the difference between an illegal pyramid scheme and a legitimate multi-level marketing. A pyramid scheme is a scheme in which new entrants put money into the scheme, and their money is used to pay off more senior participants in the scheme. So each. If MLM's are not a pyramid scheme, how about they operate like legitimate businesses? Eliminate the bottom.
Is pyramid scheme illegal VideoThe Little Black Book of Scams: Pyramid Schemes Multi-level marketing structures are commonly used for the distribution of goods and services in the direct selling industry. You bring in people to sell the product and you get a cut of their profits. The pyramid scheme disguised as a multi-level marketing opportunity is not always easy to spot, but is just as much of a scam as the chain letter. Legitimate businesses require participants to buy or order only as much stock as they can realistically expect to sell. If any of these conditions exist, the purported "sale" of the product or service may just mask a pyramid scheme that promotes an endless chain of recruiting and inventory loading. They pocket the fees and other payments made by those who join under them.
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